Christie & Co has reported “robust” deal volumes along with a rise in care homes closures in 2023.

In its Business Outlook 2024 report, the specialist business property adviser reported a 14% rise in completions last year.

Wider cost pressures on smaller, converted care homes increased closure rates, however, with the proportion of close care homes sold rising to 19% of deal volumes in 2023 compared with 13% in 2022.

Christie & Co said new builds were not keeping pace with closures with its number of distressed sales rising by 7%.

More positively, the company did not see a material deterioration in asset values for going-concern deals – noting a 0.4% decrease in its annual price index – and the performance of the sector fared well compared with other asset classes.  

In its survey of healthcare professionals, 48% felt positive about the year ahead – a 14% rise on the previous year – while just 9% felt negative. When asked about their sale and acquisition plans in 2024, 77% said they were planning to buy and/or sell this year.

The company made the following predictions for 2024:

• Capital values will remain stable with strong occupancy levels and investor demand offsetting higher debt costs
• Capital markets activity will increase with a more stable interest rate environment 
• Increased number of OpCo transactions as operators seek to expand their portfolios without tying up capital in real estate  
• Growing distress for smaller assets with rising staffing and capital costs, largely driven by the increasing minimum wage
• New build development activity will increase across broader geographical regions as operators seek less competitive operating markets
• Ongoing rationalisation from larger providers and third sector providers
• Continued protractions and uncertainty in the planning system will constrain the supply of consented care home development sites.

Richard Lunn, managing director – Care at Christie & Co, said: “Despite the undoubted economic headwinds, the care sector remained resilient through 2023. Good levels of demand and a limited availability of stock enabled pricing to hold up well. Moving into 2024, we have had a busy January so far and are positive about the prospects for the year ahead.”